Wall Street wary of Comcast

Cable giant may fork over $4-6 billion to GE

Comcast posted solid third-quarter earnings on Wednesday, but many on Wall Street remain unimpressed by the prospect of the cable giant buying a majority stake in NBC Universal, even as that deal appears to be coming to fruition.

Insiders close to the situation say Comcast and NBC U parent General Electric are moving close to an agreement that would call for Comcast to fork over $4 billion-$6 billion in cash to acquire 51% of the Peacock and consolidate its cable channels (including E!, Style, G4 and regional sports outlets) into the company.

Deal would leave the enlarged NBC U with about $12 billion in debt, and GE would have the right to sell more of its remaining stake to Comcast over time. Although sources cautioned that the complex talks could still be derailed by any number of issues, it’s possible that an agreement could be unveiled as early as next week.

The momentum between GE and Comcast is the latest indication that Vivendi, which owns 20% of NBC U, is poised to exercise its option to sell its stake back to GE. Contractually, Vivendi has three weeks as of Nov. 15 to inform GE of its intent on that option.

Reps for Comcast and GE declined comment.

Comcast topper Brian Roberts and chief operating officer Stephen Burke were careful not to utter the words “NBC Universal” on the company’s earnings conference call. Roberts began the sesh noting that execs can’t comment on all the media reports about “a potential content investment by Comcast.” But he did seek to reassure Wall Streeters that Comcast was taking careful stock of what an NBC U purchase would mean to its bottom line.

“We will only look at opportunities in our core businesses that can potentially accelerate growth, make those businesses more profitable and differentiated and give them the benefits of scale,” Roberts said.

For the third quarter, Comcast posted a 22.5% increase in profits, bolstered by subscriber gains and a rebound in the number of customers taking its high-speed Internet service.

Revenue increased 3% in the quarter to $8.8 billion, while operating cash flow inched up 2.7% to $3.3 billion. Net income spiked 22.5% to $944 million. But investor jitters on the possible NBC U buy sent the company’s shares down 45¢, or 3.1%, to close at $14.06.

During the call, Roberts and Burke talked up the company’s recent moves in beefing up its video-on-demand offerings and the plan for the broader rollout of its Comcast On Demand Online service by year’s end (Daily Variety, Oct. 30).

The duo said they were pushing hard to get more theatrical titles on a day-and-date basis with their DVD releases — something studios have traditionally been reluctant to do out of fear of cannibalizing vid sales. Among the titles that Comcast On Demand will offer concurrent with the homevid release this month are “Angels and Demons,” “Bruno” and “Funny People.”